DETROIT, Nov 29 (Reuters) - Fitch Ratings said it expects U.S. new vehicle sales to drop slightly in 2018, which “could weigh a bit” on General Motors Co and Ford Motor Co because of the importance of their home market on their overall earnings performance.
Fitch expects auto sales to hit 16.8 million units in 2018. Auto consultancy LMC recently raised its 2017 full-year forecast to 17.2 million units from 17.1 million units.
“Although Fitch’s outlook for the U.S. auto sector is stable, downside risks are increasing,” senior director Stephen Brown wrote in a note.
Despite the risk for GM and Ford, Brown wrote both automakers should “perform solidly” in 2018.
Near term, Brown wrote that geopolitical risks such as the ongoing renegotiation of the North American Free Trade Agreement (NAFTA) “that could negatively impact the sector are rising.”
Longer term, new technologies such as electric vehicles and self-driving cars could create new competitors that may “upend the industry’s status quo,” he added.
U.S. new auto sales rose from the end of the Great Recession through to 2016 when they hit an annual record of 17.55 million units.
But a saturated market, thanks partly to a glut of nearly new used vehicles, has forced automakers to hike discounts to entice consumers to buy this year and full-year 2017 total sales are expected to decline slightly to a little over 17 million units versus 2016.
LMC expects car sales to dip slightly to 17 million units in 2018 and 16.8 million units in 2019.
Reporting By Nick Carey; editing by Diane Craft